have been one group of people kind of immune from this and that as the state workers the federal employees certain firefighters policemen they have some guaranteed pensions guaranteed by the state so if it if the returns are not good enough of course the states just raise taxes and make sure that these guaranteed pensions are met well it turns out as looking pretty bad wall street managers have cost americans more than six hundred billion dollars over the past decade over the last decade fund managers who oversee the pensions of the nation's teachers firefighters police and other government workers have doubled down on an investment strategy that has cost us taxpayers at least six hundred billion dollars possibly more than a trillion investment data and calculations by yahoo finance found guess why who did they turn the money over to. private equity and hedge funds oh oh yeah well as if said many times on the show pensions fon are where risk goes to die in other

words eye wall street to risk they make bad bets they put a lot of these bad trades into what's called an error account i haven't mentioned the error account in a while but every brokerage firm out the error account where you make a bad trade is something goes wrong you stick it in this error account where it's not accounted for on any financial statements officially and then eventually some pension fund somewhere and in getting that trade and they backdated and they stick it in with a lot of other garbage and the pension fund managers are typically kind of underpaid low level people that don't really know much and i'm a robber citroen famously was the manager and i think was orange county and it was a very famous case of somebody who was and complete idiot managing the shoot fund that's generally the case in the industry they purposefully put people who are morons into these jobs so they can easily steal from these pension accounts but

part of the problem has been that they charge huge fees to manage it and they have they don't outperform the market so this is how they get sold seeking higher gains pension fund managers have upped their investment in so-called alternative strategies that are costly and weighed down returns quote we find that some of the worst performing plans are those that went into alternatives late in the last decade said john pierre aubrey air research director at the center for retirement research at boston college we studied the impact of investing on into alternatives and public pension funds they don't outperform the market had they just invested in vanguard index fund that just mentioned were the heirs and yes the the ever since john boggle you know invented the index fund over there vanguard it's been outperforming every manager in any significant time period five year ten year two. air and this is undisputed facts occasionally hedged on our private equity fund while opera form the market for a year or two but over five years ten years they never perform the market any

pension fund this on invested in a passive index fund like a vanguard know if the fund is going to underperform the market and that the those those are just basically as night follows day if the facts of the case nevertheless these pension fund managers continue to write we would buy them because because they are able to charge such high fees against other pension funds other state employee pension funds they can afford maybe flashier shoes and clothing in and fly private jets and you know the pension fund manager so impressed and they order you know two thousand dollars to fund manager is picked by the wall street crook there's going to be investing that pension fund money ok that's just the way they're not that pension fund manager is not a innocent bystander in all this they're placed in that role by these crooks to buy the crook it's just bag o. worms from the crooks ok now if the teacher's fun in the fireman's fund the police fund they want to get

a real return on their pensions and they want to wise up they need to get you know make sure the person running their fund is actually nobody just put it into an index fund well remember their pensions are guaranteed so they don't care right the participants in it as it says alternative funds invest in things like hedge funds private equity real estate or commodities rather than traditional stocks and bonds because pensions are guaranteed under performance has hit taxpayers and the form of budget cuts for schools hospitals and libraries and decreased spending on infrastructure health care and other ok when i say all the see this type of guarantee was in the savings and loan crisis in one nine hundred eighty s. we see it in the current crisis in the two thousand and eight banking crisis where the banks were guaranteed to get bailed out by barack obama and the federal government even though they made a horrible loans and they made horrible decisions they got bailed out not the debtors so the savings and loan crisis that the government guaranteed. insurance program for deposits that was abused by the famous five but the keating five during that era now the pension funds as guaranteed returns that is being abused by the

crooks are you the guarantee to shovel it a lot of talks the garbage that is ending up is a guaranteed no because at the end of the day a lot of these pension accounts are not being cut back people who think that they had a pension are being told has been run out you don't have a pension anymore you're now flat broke you have to go out to the street and big for money don't get addicted to heroin we don't want you anymore drop dead ok in a private sector when the pension goes bust because of wall street charlatans goes bust and everybody loses their money the participants in the private pension scheme here it's chicago or california california guarantees a pension of say two hundred thousand dollars a year for the local policeman well if if the pension fund fails to return that amount of money they just raise taxes on other people to pay for their pensions so here i want to say all three study shows that across the board public pension fund managers have thrown increasingly more money at these complex and pricey alternative funds despite the fact that they consistently underperform simple index

funds available for a fraction of the fee of the cost part of the reason why they do that is because on paper. the fancy you know private equity or hedge fund is promising we could probably get you returns of ten percent a year so that because of the hollowing out of the previous hedge fund guy you know they need that ten percent they need to show their members that they're going to get ten percent the index fund will only guarantee basically the market you'll do as well as the market which might be four percent right i get the point that the sort of private fund it's ok to go bankrupt however as you point out does and bankrupting people in the sense that they impose austerity they impose they raise taxes they force people they can't afford health to give health care to people people end up on the street destitute and dead. right so it's just a mixed the difference rich in crime on the street and crime on wall street is that

a criminal you know knocks over a liquor store is doing so in real time they shoot a guy there's still the money it takes twenty minutes with wall street they are patient bill still your money over yours bernie madoff stole money for years and years and years yes you see knew about it on three separate occasions you just it or year after year after year was because a slow drip of criminality it's a slow drip there's still slowly it's a slow motion theft right people think it's not happening and yet there they are pensions bust dollars no good feds over leverage because so they stay employees by the way become participants in the cycle of fraud upon the other taxpayers because the alternative investment fund managers promise higher returns they sell the pension fund manager and high returns and thus sold on flashy promises of high returns those high assumptions allowed the employees to make not as high contributions scott could be chief investment officer

a financial management firm carson group told yahoo finance they are trying to find a way to catch up because they have uncovered the liabilities i don't know if that is particularly well but so if you're told that here mr fireman or mr policeman or mrs police officer you know you don't have to contribute as much as you did last year because last year we were in an index fund and this year we're going to move to a hedge fund flashy hedge fund guy who flew here in a private jet he's obviously doing very well but he's promising you that his returns are going to hire and therefore you don't have to give five hundred dollars a week towards your pension fund but you can retire in the same amount but only give three hundred a week so you have two hundred more in your pocket this week they can say yeah go with the private equity guy like people are stupid you know that movie that came out about the theft that went on during the subprime crisis. and it documented the shortage of short right so here's like it's a documentary practically of how bunch of bankers got together and rob americans

blind for billions of dollars now people know me i cover finance right they come up to me the question asked me every single time someone comes up to me goes hey master you saw the movie the big short right. the yes it is true. like with a conspiratorial it is true yes true you're being robbed blind every day what you can do about it well nevertheless data shows that public pension funds are going even more and more into it i would do have to say the hedge funds and the private equity these alternative investments did do better only during one period which was the financial crisis two thousand and eight two thousand and nine because they have more shorts they can do the big shorts rather than the index fund so they do do better and a very little good that's better in that they lost money at all less accelerated rate than the overall market for a short period of time doing better best just being drowning slower so the gap

the six hundred billion dollar gap comes from not only their fees but also their their performance the nation's pension fund returns have also been hit by fees hoax study found that state pension funds paid on average fees totalling point five six percent of assets held to fund managers during the ten year period had the nation's collective pension fund managers invested in the sixty forty vanguard balance index fund for example which carries a point zero seven percent fee they would have saved one hundred fifty billion over ten years so the returns were five hundred billion dollars less just on their performance the pension fund performance investing private equity and hedge fund was fifty five hundred billion over the past ten years just based on stock picks versus an index fund and then another hundred fifty billion worse off based on the fees they paid for that worst performance to pensions of the teachers in the firemen in the place because you're so stupid you're going to have to work another

fifteen years like a no no no they want the taxpayers that pay them so you have been forced to work because you refuse take responsibility for your actions of burning off all they are now doing no work in the ten years get back on the on the the on. the patrol car flatfoot know they're going to be subjected to ten more years of kai's report detailing hearings that were no don't shoot me though shoot don't shoot don't go to your patron manager and get a real one prick and it. lives they might matter but they're going to be bankrupt all right we're going to take a break we'll be back right after this important break. it's a very rough terrain you sort of climates and you have to fight to be able to plan . it was gunshots going top them and so many friends who would have been going

there and they have been. you know not. telling. you know i don't want. to see everybody in the children is ready to participate in the good. old to me but to me that. you don't think about these these soldiers on no you're just treated like you know another patient. joined me every thursday on the alex salmond show and i'll be speaking to guests of the world of politics school business i'm show business i'll see if. this is harlan kentucky. over all of this move the

voices of the border street fanny's remain. a co money city with almost no coal mines left. the jobs are gone all the polarizer said i'd. love to see these people as survivors of a wool disappearing before their eyes. i remember thinking when i was younger that if anything ever happened to the coal mines here that it would become a ghost town but i never thought in a million years i would see that and it's happened it's happened.

welcome back to the kaiser report i'm max keyser time now to go to misfire sign a plan imposing a dot com let's welcome great being here now want a name one of the newly discovered planets planet ponzi if you can buy that you can have a planet named after you can it is it a star or star only a star all right and i think in my real estate on the moon sure every thought about naming a star or some real estate on the moon after your book i think that certain equities and certain bonds and certain real estate properties are priced as high as the yeah it's also about like market looks like it's going higher and higher i mean what's happening it's all valuation if you can buy stock stocks back and pay yourself because illions you know borrow money from the fed for free or borrow money at zero interest rate zero interest rates and rebuy buyer shares back the shares go up and you get a gigantic bonus right so does that work it works until it doesn't so right you know like you saw netflix recently had the earnings announcement and so the stock

dropped sixty dollars in the second row you know that's a big problem if you have a big portfolio of something like that if you're prepared for that kind of wild ride volatility you know you buy a stock that has no free cash flow no earnings but the price keeps going up so just for those who might not exactly let's just walk through it a little because it is interesting so i fear an executive at a company of options to buy that stock in the options are given to you for free and then you can borrow money from the fed first actually fray and buy back your own stock and then the stock price goes up and therefore your option to buy and then you cash out those options into the public marketplace in are just printing money for yourself billions and billions and you've won the lottery mate yeah that's exactly right so the way that it works the simplistic way to explain this is you get your pay is based on the stock performance so if the stock goes up you make more money so you don't care if you cannibal. future earnings you don't care if you

cannibalize or fire the employees with you know with to make you what you want to do is try to make that share price go up by any means and buying stock back is the most certain way to do it ok now there's one part of that equation let's look at it mark lustily borrow money from the fed for near zero now interest rates are creeping higher they're now at multi-year highs ten your eyes across the curve as it's called they're getting two percent three percent on various fixed income instruments is this a secular move up in rates or another head fake it's a head fake and it we're not anywhere near normalisation normalization is about six percent and we're far far from that we'll never get there are low cut interest rates before we get even close to that because we're about to head into a recession if we're not in a recession now the other thing about you know that the share buybacks the biggest problem with that is you know what happens is that the stock prices keep going up up up and up but you know you're not going to have any kind of growth in terms of

job creation or in terms of moving the company forward so basically it's going to atrophy and die and you'll have a lot of zombie companies that are being supported by these ultra low artificial interest rates corporate debt has never been higher there's never been more corporate debt issued now when people have to have. a resetting of like the loans for all the real estate and property that we have out there these resets are coming due in the next three years a lot of the corporate debt is rolling over i don't know who's going to buy it and i don't think that there's an infinite demand for this paper and the high yield paper especially you seen a great gap between where high yield paper is trading and regular paper and i think you're going to see people start to shun high yield which could be the beginning of the next crisis which what we're seeing in our emerging markets it could be the lynchpin you see in venezuela hyperinflation you see argentina defaulting on those fine hundred year bonds we. talked about and laughed and said anybody who buys

there should be fired now they're going to the i.m.f. begging for money you know the whole davos thing was a total scam where the the person in charge of the let me jump in here said i if you talk a macro talk of global trump is now into his trade war he's talking to china talking russia so at the time walk us through how you see that playing out this trade war those tariffs a lot of people were you know shrieking that this would be horrible so far it doesn't not look horrible looks like a smart thing to do in some quarters or what are your thoughts well look you have a lot of the globalists want one global government to rule everything and i'm not so sure that we're that far away from that right now i mean with what's going on with the european union i mean italy has four trillion dollars in debt that they can never repay and you've got a government that came in that said well what we're going to do is we're going to restructure that debt which that that's a signal that we're not going to pay that debt back if you look at target to where you look at the amount of withdrawals from the banking system in italy for the past

three or four months it's alarmingly high so this indicates that first of all those banks in italy are insolvent they are stuffed to the gills with the worthless italian bonds that are backed by nothing but mario draggy or the european central bank's promises ok so. who's going to be left holding the bag this time cyprus is the model for sanction deposit confiscations that's why the italians are pulling all their money out of the banks because they know that these bonds are going to fall eventually and what's going to happen cyprus being a bail in versus a bail. out would be like in two thousand and eight where the government prints trillions of dollars and gives it to the banks to bail them out of bail in is when depositors' get their money ripped out these organizations what happened in cyprus so you're saying you know it only takes it they say anything over one hundred thousand euros you have on deposit we're keeping so if you have any that playing out in italy i see that playing out everywhere i think eventually when the banks fail next time in the united states as well i think that people are at risk because

the f.d.i.c which is a federal insurance deposit corporation only has a minute fraction of what they're supposed to have i mean they could never never ever if there was a systemic banking failure on or the obligations they have to insure all the depositors funds the i.r.s. recently got approval just within the last twenty four months to seize people's passports if they feel that they are in arrears on their taxes for as little as fifty thousand dollars and initially there was no action now in the last few months they've said they've seized or canceled almost three hundred fifty thousand american passports so is the i.r.s. now it would be similar to what you're saying they're simply seizing people's assets so that the debts are there as you point out the debts of never been higher the interest on the debt is now climbing all the accounting tricks been burnt out plan a ponzi and so now they're just outright taking stealing grabbing assaulting folks

there's a couple things here like i say in my book don't take my word for anything i have in here ok i walk you through the numbers and i use the government's own data so by my by my calculations and by others calculations our debt the united states is probably somewhere around. two hundred fifty trillion dollars. off balance sheet well this it no not at all no not off balance sheet items not including off balance sheet items where i'm talking about social security medicare medicaid and a host of other entitlement programs that the government is legally but i'm not included in their official nope not in the twenty trillion or twenty one trillion that we have a lot of they don't include that's like saying what are your liabilities and you tell me what your liabilities and your assets are and you exclude the five million dollar mortgage you have on a property that's worth i know close of all the liabilities it's called legally binding obligations hundreds something two hundred fifty trillion probably which is almost what three times or four times global g.d.p. so i mean this is a join or miss amount so this is why interest rates if they go above four percent

it makes it technically impossible for the treasury to service the amount of debt that they have that's why i'm concerned about the rollover of corporate debt and high yield to coming due in the next two to three years ok so our plan policy they drill our plan they drill for money by going debt and they gel negatively into negative interest rates that's arrest the drilling that goes on plan a ponzi right which is another form of wealth confiscation writes i've asked three forms of confiscation we've identified the last few minutes number one would be this i.r.s. money grab number two bell ends by banks taking the positive cast number three negative interest rate correct so that there's a whole array of institutionalized money grabbing techniques that are now being rolled out globally and people of course are being disenfranchised as as you know san francisco is down need deep in human feces right because of the economy is gone

bifurcated to the point dysfunctional utterly and so is there any end to the drilling down into the plan a ponzi money grab by the corrupt government and banks well you know look if you see what's going on the most glaringly obvious problem we have is the. diversion that we've got to for d.s. to divert deflect deceive and deny they've got this whole thing with trump going on in the media. it's russia russia russia everything is russia russia russia there's no evidence there's nothing and what they do is just put this on the airwaves they don't tell everybody about the dire financial circumstances across the globe right now and we're about to fall off the end of the precipice and of course like they've done with everything else they'll blame that all it's going to be the pump be dumpy trumpy you know they pump the markets up people all the smart money is dumping all the equities at these prices and they're going to blame trump so pump you don't be trumpy is the place where buzzword of the day a. good t. shirt and blue collar ponzi humpty dumpty tromping marry again i mean let me ask

you a quick like thirty thousand feet looking down at the numbers does this or does it not make sense trumps in recently that he is concerned about funding made particularly with germany involved in nato while they simultaneously a are selling are getting gas from russia right the money is going to nato directly to russia but the purpose ostensibly for nato is to defend these european countries from russia that's the purpose of supposedly this is ak and a correct assessment i mean your money manager you're in big business finance well is that make sense tell us about it here's what i think about that look nato was a really good thing after post world war two when there were a lot of cold war tensions going on in the one nine hundred fifty s. one nine hundred sixty s. how much is the world changed since then and really you can push a button and the world do you really need to the military industrial complex is

pulling all the strings in washington there is a deep state we've established that so this is what happens these guys want war war is big business look at boeing shares look at lockheed martin shares look at all those military industrial complex see they've gone they've skyrocketed so these guys want to keep themselves in like flint and so all right so in other words the nato is out. lived its purpose and i think it's got to be modernized and i remain and i know i don't because resources you know i don't think america should be picking up ninety one percent of the tab especially with germany like laughing at it so you know germany's going to pick up some of the tab the other countries need to pick up some of the tab or mean that's only right i mean do you want your taxes to go to pick up your number i mean my thought is this that with trump in south korea and pulling troops out of south korea there's fifty eight thousand troops and germany that's part of nato and the whole mideast fandango right and he mentioned

during a recent press conference after the summit that putin tromp we're deep into the israeli middle east equation so the trump looks on americans balance sheet you mention our he's dead and his fifty cents of every tax dollar going to the pentagon and he says you know what i can cut that in half if i simply pull out of germany pull out of south korea and finally solve the middle east and banco i'm going to save one point five trillion dollars in a year right i mean and lose what i'm not going to lose anything the real problem max and nobody's focusing on this and people eventually pick up on it but china owns washington and china is the military threat china is the threat china is the threat to america russia is g.d.p. is under two trillion dollars around two trillion dollars china is the biggest competitor from a military perspective in from a trade perspective the u.s. as that's what the focus on washington should be which i was not an idealogue i mean there it's all about cutting deals are not like you know. chairman mao anymore

it's about making bucks i don't think china can be trusted at all and i think that there is a huge problem with china's economic data and the way that they've pumped up their economy with printed money we got to cut it off their mitts thanks so much for being on the kaiser report well thanks for having me and that's about it for this decision of the cause report was may mask guys or say salmon i just think it's fire stein planet policy. that's where we all live feel to catch us on twitter it's kaiser report until next time by. four men are sitting in a car when the fifth gets shot in the head. for different versions of what. one of them is on the death row there's no way he could

have done it there's no possible way because the list did not shoot around a corner. close. the mast some for something. indigenous people as you know we that. in. the trees. most politicians say the only guys but yes the kids. and all of a sudden the man just temple be there. i

said i will enter it even if they will not allow me. even if they will shoot we've . had all along a million million indeed on the market now only menominee been thought to be shabby don't buy it you may not know now that i've gotten it looking like i mean economy are you. not. bothering me over. to.

the us president's national security adviser confirms a second trumpington summit has been postponed until quote after the russia witch hunt is over. meanwhile donald trump claims are. will interfere in the upcoming midterm elections to help his wife the democrats russian meddling remains divisive an issue as we hear. in the way that osama bin ladin meddled with the world trade center. is on the way in south africa with america's high on the agenda.